SHANGHAI, Aug 16 (Reuters) - The yuan touched its lowestlevel in a week on Thursday, after the U.S. currency rose inglobal markets the day before and a large order set off a burstof dollar buying in early trade.

The yuan touched 3.3690 per dollar in early trade onThursday, its weakest level since Aug. 7, before gainingslightly to 6.3683 by midday, 0.1 percent weaker thanWednesday's close.

That compared to a roughly 0.3 percent rise in the dollarindex between Wednesday's close and midday Thursday.

Traders said a bank in south China placed a large dollarorder, provoking other banks to follow suit, buying dollars inanticipation of yuan depreciation.

"With the euro not moving much, customer flow is stilldriving the spot rate," said a traders at a western bank inGuangzhou.

Despite the drop on Thursday, traders widely expect the spotrate to remain in the 6.35-6.38 range in the next several weeks.It has fluctuated in that range since June, briefly touching ayear-low of 6.3967 on July 25.

"The market has been quite stable intraday recently. Themain risk is overnight," said a trader at a European bank inShanghai.

The relative stability of the yuan over the last week couldalso explain why customer flow has become more balanced betweenyuan buyers and sellers, compared with the May-July period, whendollar demand strongly exceeded yuan demand in China's interbankmarket.

Though China continued to run a sizable trade surplus inthat period, yuan demand evaporated, as corporates chose to holdon to their dollar receipts rather than trading them for yuan.

With the euro crisis sparking safe haven demand for dollarsglobally, Chinese corporates hoped to book FX gains by holdingon tightly to their dollars.

But with the yuan stabilising, corporates may now be lessworried about yuan depreciation.

Despite this balancing trend, however, the yuan hascontinued to trade weaker than the midpoint, as it has sincemid-March. As long as such a trend continues, significant yuanappreciation remains unlikely. The yuan has fallen 1.2 percentin 2012.

In the offshore market on Thursday, one-year non-deliverableforwards were bid at 6.4470 at midday, implying1.2 percent depreciation over the next twelve months, littlechanged from Wednesday's close.